Insurance premiums often increase at the time of renewal due to various factors. While some of these are within your control, others depend on industry trends and economic factors.

📌 Key Insights:

✅ Claims history and insurance lapses can increase premiums.

✅ Aging and inflation make policies costlier over time.

✅ People in high-risk pools (risky jobs, accident-prone lifestyles) face higher premiums.

✅ Medical inflation results in rising health insurance costs.

Why Do Insurance Premiums Increase at Renewal?

The fundamental principle of insurance is risk assessment.

📌 How does it work?

• Higher risk → Higher premium.

• If an insurance company detects increased risk, the premium goes up.

🚀 Let’s explore the factors that impact premium increases.

Controllable Factors That Can Increase Premiums

1. Claims History

📌 More claims = Higher risk = Increased premium.

• Customers who frequently file claims are seen as high-risk.

• Premiums increase if multiple claims are made within 4-6 years.

📌 Example:

A motor insurance company will increase premiums if a customer files accident claims frequently.

💡 Golden Rule:

Only make claims for significant losses. Avoid claiming for minor repairs to keep your premiums low.

2. Lapse in Insurance Coverage

📌 If you miss premium payments, you lose accumulated discounts.

• A policy lapse occurs when an individual fails to pay premiums on time.

• No-claim bonuses (NCB) and discounts are lost, increasing the cost of a new policy.

• Insurance companies may increase premiums when renewing a lapsed policy.

💡 Pro Tip: Always renew your policy on time to avoid higher premiums later.

Uncontrollable Factors That Increase Insurance Premiums

1. Age

📌 The older you get, the higher your insurance premium.

• Life & health insurance premiums are age-dependent.

• Older individuals face higher medical risks, leading to increased costs.

💡 Best Strategy:

Get an insurance policy at a young age to lock in lower premiums for life.

2. Risk Pool & Lifestyle Choices

📌 Your premium depends on the risk profile of people in your group.

• If you belong to a high-risk group, your premiums may increase collectively.

• People in risky professions (mountain climbers, stunt performers, pilots, etc.) have higher insurance costs.

💡 However, employer tie-ups with insurers can help employees get lower rates.

3. Natural Disasters & Regional Risks

📌 Living in a high-risk area increases insurance costs.

• If your region is prone to earthquakes, floods, or hurricanes, insurers adjust premiums accordingly.

• Higher risk of property damage = Higher premium.

💡 Example: Homeowners in flood-prone areas pay more for home insurance than those in safer locations.

4. Inflation in Healthcare Costs

📌 Medical inflation leads to higher health insurance premiums.

• Hospitalization, surgeries, and treatment costs increase yearly.

• Insurers adjust health insurance premiums to keep up with rising healthcare expenses.

💡 How to avoid this?

• Choose an insurance plan that accounts for medical inflation.

• Get insured early and renew without fail to secure lower premiums.

Conclusion

🚀 Key Takeaways:

✅ Insurance premiums increase due to risk assessment and economic factors.

✅ Maintaining a low claims history can help reduce increases.

✅ Renew policies on time to avoid losing no-claim bonuses.

✅ Buying insurance at a young age helps lock in lower premiums.

✅ Consider long-term insurance plans that account for inflation.

💡 Always compare renewal offers and negotiate for better rates when possible!